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In today’s edition
- Comcast’s Q3 results
- X’s rocky transition under Musk
- Spending up, savings down in the USA
- Snap beats Q3 expectations
- Air travel soars in the USA
Market Snapshot
The S&P 500 Index entered a correction phase due to fears of high-interest rates and economic instability. However, positive earnings from Amazon and Intel helped tech shares, slightly lifting the Nasdaq Composite.
Friday’s economic and inflation data didn’t significantly alter market expectations regarding the Federal Reserve’s rate policies. The September Personal Consumption Expenditure report, though, pointed to persistent inflation above the Fed’s target.
Key market indices ended as follows: For the week, the S&P 500 was down 2.5%, the Dow Jones Industrial Average was down 2.1%, and the Nasdaq Composite was down 2.6%.
The upcoming week is crucial for earnings season, with over 1,200 companies reporting. So far, 78% of S&P 500 companies beat earnings forecasts, but only 47% exceeded revenue estimates, indicating challenges in capitalizing on price hikes amidst potentially changing spending behaviors.
Market close data: Week of Oct 23-27, 2023
News Summaries
As Thanksgiving approaches, air travel is not just reviving, it’s thriving. For the US market, recent TSA data shows a daily average of 2.48 million people undergoing airport screening in the week ending October 23, marking a 10% increase compared to the same period in 2019. This surge represents a significant rebound since the pandemic, which had severely impacted the $1.17 trillion travel industry. The resurgence in air travel, after enduring setbacks from new Covid variants, staffing shortages during summer 2022, and weather-induced cancellations, hints at a robust recovery, promising potential benefits for related companies such as Airbnb, offering modern hospitality solutions to travelers.
For a detailed analysis of Airbnb’s business, head to our comprehensive blog, part of Vested’s ‘Under the Spotlight’ series.
Comcast’s revenue exceeded $30 billion, surpassing forecasts thanks to its theme parks and streaming services, despite losing 18,000 broadband and 490,000 video subscribers in its connectivity sector. Its streaming service, Peacock, gained 4 million subscribers, largely due to the Super Mario Bros. Movie, boosting its revenue by 64%. Meanwhile, Universal theme parks had a record quarter. However, the studio division saw a 24% revenue drop year-over-year, and the challenges in the broadband sector led to over an 8% share price decline last week, as subscriber losses overshadowed the positive gains.
Under Elon Musk’s helm, X (previously Twitter) witnessed a slump in user engagement and advertising revenue during its first year. Notably, global app downloads and monthly active users dropped by 38% and 14.8% respectively. Although Musk’s profile traffic soared by 96%, the advertiser exodus led to a stark revenue decline, with the U.S. ad business plunging by 60%. The projected revenue for this year is around $2.9 billion, a sharp fall from last year’s $4.14 billion. Despite new product rollouts aimed at morphing X into a super app, the initial journey post-acquisition highlights a rough road ahead in regaining its lost glory.
Americans ramped up spending in September, nudging the annualized Q3 GDP growth to a solid 4.9%. However, the personal income side lagged, seeing a mere 0.3% increase, which, coupled with a 0.1% dip in real disposable income, brought the personal saving rate down to 3.4% from 4%. The scenario sets a worrying stage as dwindling savings could spell economic risks moving into 2024. The rising spending against weak income growth paints a picture of a precarious economic dance, with sustainability coming into question as the trajectory to lower inflation appears bumpy.
Snap Inc. reported a favorable Q3 2023 with revenues of $1.19 billion, a 5% increase, outperforming Wall Street’s $1.11 billion estimate. The company saw a net loss of $368 million but added 9 million daily users, hitting an average of 406 million, in line with projections. Improvements to its ad platform contributed to this uptick. For Q4, revenue is forecasted between $1.32 billion to $1.375 billion, indicating a 2% to 6% year-over-year growth. Meanwhile, the Snapchat+ subscription service garnered 5 million subscribers, and their new AI chatbot, My AI, engaged over 200 million people, showcasing Snap’s evolving offerings and user engagement.
